Business · Markets · 1 hr ago
South Korean investors face rising mortgage costs after stock sell-off
South Korea’s stock markets rebounded after a steep sell-off, but the recovery only made up part of the losses.
The KOSPI had fallen 20.7% over seven trading days before its 2.05% rise on October 16.
At the same time, KB Kookmin Bank and Woori Bank raised some variable mortgage rates by 0.25 percentage points, while NH Nonghyup Bank raised them by 0.19 points.
Higher funding costs pushed mortgage rates up after a key bank funding measure, COFIX, rose to 3.43% in September from 3.18% in August.
If a borrower owes 400 million won and the balance stays unchanged, a 0.25-point rate increase would add about 1 million won in annual interest, though actual costs vary by loan.
Investors may have to choose between selling at a loss and continuing to pay interest while waiting for shares to recover.
Existing borrowers’ rates do not all change at once; the new rate applies when each loan is next reset, and borrowers are advised to review what they can afford.
South Korea’s main banks raised rates on variable-rate mortgages as the cost of funding increased.
The moves followed a seven-trading-day fall in the KOSPI of 20.7%, which reduced the value of investments borrowers might sell to repay debt.
Rates on some six-month variable mortgage products rose by as much as 0.25 percentage points.
For a borrower with a 400 million won balance, a 0.25-point increase would add about 1 million won in annual interest if the balance stayed unchanged.
The KOSPI rebounded on October 16, but recovered only part of its previous day’s decline.
- Who
- South Korean investors with loans, and borrowers with variable-rate mortgages.
- What
- Major banks raised rates on some variable-rate home loans as stock prices fell, increasing pressure on borrowers.
- When
- The rate increases took effect on October 17, 2026; the KOSPI rebounded on October 16.
- Where
- South Korea.
- Why
- Banks raised rates after the September new-loan COFIX funding benchmark increased by 0.25 percentage points.
This story does not have two clearly opposing sides.
The KOSPI fell for seven consecutive trading days, losing 20.7%.
The KOSPI rose 2.05% to 5,668.05, recovering part of the previous day’s fall.
Variable mortgage rates at KB Kookmin, Woori and NH NongHyup banks increased.
The new-loan COFIX rate was 3.43%, up 0.25 percentage points from the previous month.
- KOSPI fall
- 20.7% over seven trading days
- KB Kookmin and Woori rate increases
- 0.25 percentage points
- NH NongHyup rate increase
- 0.19 percentage points
- September new-loan COFIX
- 3.43%
- Illustrative annual interest increase
- 1 million won on a 400 million won balance
- Variable-rate share of new mortgages
- 64.7% in August
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